Examining the “family effect” on firm performance

The purpose of this article is to provide an explanation for the contradictory evidence in the literature regarding the performance of family-owned firms. The article suggests that most of the research fails to clearly describe the “family effect ” on organizational perfor-mance. The “family effect, ” based on agency theory and the resource-based view of the firm, is described and propositions are generated that examine the relationship between families and organizational performance. Implications for theory and research are also discussed. How might a family that owns and manages an enterprise affect its performance? To answer this question, a number of scholars have attempted to compare the performance of family firms with firms having no family ties, but the results of such studies have led to mixed results and conflicting opinions regarding the impact of family contro